What is Technical Analysis?

The Short Explanation:

Technical Analysis is a methodology used to identify buying opportunities or evaluate investments. It works based on the assumption that the historical trading activity or volume and price changes can be a good indication of any future price movements of a stock or any other Security.

The majority of Technical Analysis is based on the study of price and volume of a given Security. Candlestick Charts therefore can be a great asset when conducting Technical Analysis. Technical Analysis can be conducted on any Security that has historical data available.

On contrast, Fundamental Analysis focuses more on the financials of the company, the competition, direction, etc. to give the company’s stock a fair price and to determine whether it’s over or undervalued.